Reinventing the Wheel: Green Innovation and Profitability Working Hand-in-Hand (published in CSQ Magazine, Winter of 2010/11)

Much has been written about the perceived and real benefits of green innovation and invention. Ideally, to be both environmentally and financially successful, products need to offer a triple benefit—to the environment, the consumer, and the producer. There has been an interesting and instructive evolution of the marketing of green products over the past two decades, during which time consumer attitudes and behavior have shifted from purchase decisions based on packaging claiming environmental benefits, to a focus on real benefits, including positive environmental benefits, and direct consumer benefits. The direct consumer benefits include greater quality and durability, ease of repair, upgradability, and reduced costs of use, such as lower energy consumption (where applicable).

Porter and van der Linde outlined the win-win proposition in the mid-1990s, stating that environmental regulation could drive innovation by making industry aware of and willing to exploit otherwise missed opportunities. They claimed that increased environmental regulation would result in environmental benefits and increased competitiveness. But is regulation enough to drive the necessary level of green innovation, not only to sustain the movement towards more environmentally friendly products, but also to support the many companies that have entered the green space, and that have been responsible for the successes to-date?

It is unlikely that a large enough percentage of the U.S. (or world) population will be willing to pay a premium price for a product that offers no direct consumer benefits and instead, only claims to be green—good for the environment in some way that does not directly benefit the consumer and likely is not visible to the consumer. In other words, simply putting a green label on a product and charging a premium price, even if the claims are legitimate, is simply not enough.

Today, businesses must do more—they must offer products that are truly green and that provide measurable, direct benefits to the consumer. Further, while producing the “win-win” for the consumer, they must also produce a win-win for themselves—produce green products and be competitive, including being financially competitive with companies that do not offer green products, and therefore do not incur the added costs associated with green products.

New terms like “upcycle” reflect converting recycled, reusable items and waste to higher value products and often saving energy and resources compared to using virgin or dwindling, costly, or politically risky materials. Recycling facilities generate $4.3 billion each year in revenues, while waste collection businesses generate $43.4 billion—ten times as much. Green innovators that can find ways to use waste materials to create economically viable products that meet the above-mentioned criteria of generating a triple benefit—environment, consumer, and producer, and possibly using partnering with larger companies, can bridge the historical gap between green products and competitiveness.

According to Acs and Audretsch, large firms are more innovative in capital-intensive markets because they have the financial resources to pursue product innovation in these markets, while smaller firms tend to benefit from markets that are more competitive. Smaller firms can react faster to change because they have less bureaucracy, a higher commitment from management, more exposure to competition, higher R&D efficiency, and niche strategies. Combining these finding to the need to offer direct benefits to consumers and be competitive mentioned above, those operating smaller firms should recognize the need to focus on markets where they have the greatest chances for success. In the strictest sense, this would seem to indicate that smaller firms should only play in their own sand boxes, rather than going to the beach.

An interesting trend that has developed due to the severity of the economic troubles we have been experiencing is the willingness of U.S. companies to not only partner, but to actively seek opportunities to find innovative solutions to drive new revenues from new sources. The result has been that smaller companies now have access to many of the same resources that the larger companies have exclusively enjoyed in the past. For example, many manufacturing companies with significant investments in capital equipment are looking for partnering opportunities with very small, innovative, green product companies to use their excess capacity at very affordable, and therefore competitive rates. This means that, for the first time, the smallest companies can enter markets previously requiring heavy upfront capital investments, avoiding not only the financial requirements of this equipment, but also the time to locate and build facilities, train employees, inventory raw materials, etc.

Green2Gold has its non profit intl HQ in Santa Barbara ,and for 40 years has been catalytic to sustainable,green inventors rapidly commercialising eureka moments ideas. Encouraging “Eco Enterprises” such as CWP,EcoLight,Life Cube and hundreds of others,etc.,and also establishing Licensing opportunities worldwide.Tens of thousand of members strong, worldwide,G2G encourages conventional companies to co venture,invest,license opportunities for more profit,great PR,and competitive stance across an entire spectrum of consumer ,industrial– even military tech sectors.

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